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Closing Comments


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Closing Comments

Corn was weakened by profit taking, as futures reached a five week high coming into the session.  Thoughts of weather delays kept losses reasonable, with May –4 ½ at 3.66 ½ and Dec –4 ¼ at 3.90 ¼.  USDA weekly corn inspections for the week ending April 13th tallied 1.328 MMT compared to expectations of 1.250 MMT.  In the near term, traders are likely to see choppy market action, with farmer selling keeping gains in check and wet weather in the Midwest/Delta supporting breaks.  There is still a fairly good supply of on-farm corn that will be looking for a home on rallies. Also, keep an eye on managed money’s large short position, as the Commitment of Traders report showed them selling 8K corn, taking their position to 158K short.  Regarding the much promoted corn vs beans acreage battle, it is still not a “done deal” as most farmers will not make a decision on swapping corn acres to beans until May 15-20.  So, there is still a fair amount of speculation and uncertainty that will surface over the course of the next few weeks.   In China, the government plans to decrease corn plantings by 4%, in an effort to whittle down the enormous domestic stockpiles, as they have reserves equivalent to one full year of consumption.


Soybeans could not resist the negative pull of the grains today, as the front month fell at the close, May –2 ¼ at 9.53 ¼ and Nov + ½ at 9.62 ¼.  Weekly export inspections announced by the USDA this morning were lower than expectations, at 430,879 MT vs. 525K MT.  NOPA also released their monthly report this morning, and it revealed the following: soybean crush 153.06 million bushels vs expectations of 156.7 and last month’s 142.79, soyoil stocks at 1.815 billion lbs vs. expectations of 18.1 and last month’s 1.770, and soymeal exports of 1.056 million tons vs last month’s 738,825.  China is expected to increase soybean planted acres this year by 8.1%, as part of their re-allocation of corn acres plan.  This is in-line with analysts’ expectations.  Chinese demand is solid, with imports up 20% over last year and a relatively stable economy.   


Wheat received pressure from a crop friendly weather forecast and a third consecutive week of improving conditions.  All three complexes were down, with the winter variety impacted most significantly: Chicago SRW -8 ¾, Kansas City HRW -11, and Minneapolis Spring -2.  Weekly export inspections came in over estimates at 671,868 MT vs. expectations of 500K MT.     Like corn, wheat finds itself in a largely oversold position, with managed funds -134,459, as the shorts increased by 4,375 according to Friday afternoon’s COT report.  The export cupboard has been bare, which is not a big surprise early in the week. 


Live Cattle continued their meteoric rise, building on last week’s gains, +1.050 at 126.425 (April) and +.875 at 115.575 (June).  Grilling demand should provide a good boost now that the Easter Holiday is past, as retailers are stepping up to the plate to order.  Lighter cattle weights (7 lbs lighter than last week and 11 lbs lighter than last year) have also tightened supply, which is forcing packers to ante up to higher prices.  Average wholesale beef prices and select cuts were up $1.41 per cwt and $.72 respectively. 


April Hogs expired today, as they showed a final tally of 61.975, -.475.  The June contract also registered a small loss at 72.350, -.150.  A variety of factors influenced trade including deferred months’ premiums to current cash and Friday’s fallen cash and wholesale prices, according to traders. Lower pork bellies were mostly responsible for the fall in average wholesale prices as they were down $2.67.  The seasonal shift from Easter hams to summer BLT’s is now on . . stay tuned.


Closing Market Snapshot


All opinions expressed in this commentary are solely those of Water Street Advisory. This data and these comments are provided for information purposes only and are not intended to be used for specific trading strategies. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. There is significant risk of loss involved in commodity futures and options trading and may not be suitable for all investors.

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